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Regional housing future continues to look very bad

This writer wrote a two-part article on the future of affordable housing in our San Diego region in The Daily Transcript (Jan. 15 and 16) with a follow-up article March 31. Since that time I have attended many meetings and continue to observe that nothing is being done to change things so that the affordable housing problems in San Diego can be history.

Changes discussed have included issues like changing of fees for construction projects in the city of San Diego. No major ideas to end the big risks of the slow processing times of anywhere from three to four years or more in some areas have been heard.

The county's General Plan update, which is being reviewed before it is brought to the board of supervisors for approval, includes reducing the number of housing units in some areas that builders consider as good locations for housing. Some changes include reducing the number of units now allowed from one new housing unit per four acres to one unit per 20 or even more acres per unit.

There needs a lot of review of such a change. One thing that has not been discussed, and perhaps not understood, is the city of San Diego, in particular with a large Development Services and Planning staff, and the county with its large DPLU Dept., will have to lay-off a lot of their staffs. Why? No need for much staff with fewer people filing for permits with the risk of slow processing, which our San Diego builders/lenders/investors know very well. The situation is a sad one, which also means fewer jobs for construction workers as well as the governmental staffs.

As an amateur historian, an attorney involved in real estate financing and as the retired president of a major local financial institution that financed a lot of new housing projects, I remember well the horror stories caused by the loss of about 38,000 aerospace jobs in the 1960s, also the one-year tight money period of 1974-75 and the three-year tight money period (1979-82) when Paul Volcker, as chairman of the Federal Reserve Board, led the way to drive interest rates on home loans to 18 percent. In those years my institution helped builders work through the terrible times. The sub-prime fiasco (making loans to buyers that did not qualify and then packaging and selling the loans) is unbelievable; how it could happen? How about jail time for those lenders? Newspaper articles continue on how builders, lenders including lenders who did not make sub-prime loans, investors and construction workers who have lost jobs have been devastated.

A few minor changes that are being discussed will not mean much. There has to be major changes to reduce the risks for builders, investors and lenders. Unfortunately, I do not see it happening. Minor changes will not help. The sub-prime hit hard all housing projects in the pipeline. The horror stories include the loss of thousands of jobs for labor workers in the housing construction industry. San Diego's urgent housing needs will continue as our population/growth will happen. New housing needs are the result of growth, not the cause.

I have an historical book on a not-understood point highlighting that when you build new homes in one area, it creates a movement of about three to four families for each new home (30 to 40). Apartment renters in areas like City Heights and North Park have housing open up as the people who buy the new homes turn their housing over to others, who then sell their homes. People who buy then sell/turn over their homes or rental units and it continues with movements of families. If you don't build enough new housing to meet the needs, prices and rents escalate and it affects renters (higher rents) as well as buyers. In 2004 the housing vacancy factor was only 2 percent due to the lack of needed housing supply and home prices and apartment rents soared up.

An excellent idea presented at a recent Chamber of Commerce Housing Committee meeting by the Chief Economist of San Diego Association of Governments, was in a report which made a recommendation to have local cities and the county approve areas in advance where new housing can be built and to do it ASAP. The plan would have the EIR and other issues be history so that when a builder/investor wants to build the processing would be quick/ASAP and reduce the risks that builders, investors and lenders face today. The risk would be less and be a help to return our region to the previous short processing times that made builders, investors and lenders comfortable. We need help to return our area to the time when it took less than a year to build in San Diego. Without changes, the ballgame is over and workers and builders will be hurt badly and San Diego will again return to the affordable housing shortage problem situation.

If changes are not made and a fast service mentality does not occur San Diego's affordable housing shortage situation will continue to be a recurring and permanent problem for our regions. Governmental staffs will shrink with minimal housing permit applications. Many current local builders will not even think about building again in our San Diego region. New housing is a must in the future as San Diego's growth will continue with a population increase of 134 percent of people over age 65 in 2030 (SANDAG study). Let's hope the anti-growth people don't advocate limiting families to one child per household like China does or argue against the use of prescription drugs that allows many of us to live longer. Let's make it happen and be ready to have the fast processing of new housing projects in place when the current problems are history. Major changes are needed and a few minor changes will be like "re-arranging the deck chairs on the Titanic" -- the housing ship is still going to sink. Let's save our housing ship.

Schmidt is a retired banker and attorney who is active with the chamber and in civic affairs in transportation, housing and sports. He also serves on three public boards and was Gov. Reagan's appointee to three positions in state government.

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